Boeing forecast shows $3.6T airliner market

In its latest current market outlook published last Thursday, Boeing projects a near-term increase in airline traffic growth, with global economies expected to regain lost ground in the next two or three years as they recover from the latest worldwide recession. Having grown steadily at around 5 percent per year for the past 30 years, international scheduled passenger traffic is seen as increasing annually at a higher 5.3 percent during the 2009 to 2029 timeframe, according to Boeing Commercial Airplanes marketing vice president Randy Tinseth.

Launching Boeing’s latest 20-year forecast in London four days ago, Tinseth attributed a 0.4 percent-point increase (from 4.9 to 5.3 percent) in projected long-term annual-growth rates to 2009’s lower traffic base following recession. He said he expects the average 5-percent-increase-per-year trend to resume after the 2013-2014 timeframe.

A team of six dedicated market analysts foresees a $3.6 trillion market for new commercial airplanes over the next 20 years as world economies recover. Reflecting “improving, yet still unstable [market] conditions,” the new Boeing current-market outlook expects strong demand for new and replacement aircraft to stimulate growth.

The document predicts airline requirements for 30,900 new-build commercial airplanes, including 740 freighters, by 2029. Predicting that airlines will focus on “more flights, using more efficient rather than significantly larger airplanes,” Boeing analysts see a “small” market for 720 models of 747 size, or larger. “It is a [$220 billion] market largely for replacement of existing airplanes, not additional growth, with 45 percent of demand from Asia and 23 percent from [the] Middle East.” Boeing also foresees a 20-year demand for 7,100 twin-aisle and 21,160 single-aisle aircraft, valued at $1.63 trillion and $1.68 trillion respectively, and 1,920 regional jets worth $60 billion.

“The market is doing much better than last year, but there are still challenges,” concluded Tinseth. “Airline revenue and yields are up, but fuel prices remain volatile.” Demand will be driven by “economic growth from regions with diverse airplane needs,” with the single-aisle sector dominating “due to the proliferation of low-cost carriers, emerging markets such as India, China and Southeast Asia, and continuing instability of fuel prices.” This narrowbody segment will continue to grow as older fleets are retired.

Geographically, Asia Pacific shows “the most robust market gains, with China leading the way.” About one third of all airline traffic touches that area, where continued strong growth is expected to mean that, by 2029, “almost 43 percent of all traffic will be to, from or within the region.” Asia-Pacific carriers will be the largest buyers of twin-aisle airplanes, representing about 40 percent of such demand.

The fast-growing Middle East region is also “very strong,” as airlines benefit from geography, demographics, airplane performance and “well coordinated growth and investment plans.” North America and Europe will see “substantial” demand for aircraft to replace “ageing, less-efficient” jets. Global demand will become more balanced following “robust” growth in emerging markets with dynamic populations and increasing incomes, said Tinseth.

Boeing projects the world air-cargo fleet to grow more than two thirds, from 1,750 to 2,980 airplanes, and to require 2,490 extra freighters. Additions will include 740 new-production cargo units (nominally worth $180 billion) and 1,750 airplanes converted from passenger operation. Large freighters (over 80 metric tons payload) will account for 520 new-build airplanes, while medium-capacity (40 to 80 metric tons) aircraft will number 210. There will be very few new-build “standard-body” cargo aircraft (up to 45 metric tons).

From a low-traffic base in 2009, Boeing forecasts world air cargo will increase at an average 5.9 percent per year through 2029. It estimates that this strong growth will reach “nearly 14 percent” over last year’s level. “The inclusion of [2010] high-traffic growth levels, following recession, is driving our cargo forecast upward, [but industry] strength and growth will continue to be driven by sound fundamentals: speed and reliability, consumer product innovation and global industrial interdependence.”